Broken Pie Chart | Episode 116

With Derek Moore

How is Inflation Measured? Sticky CPI vs Flexible CPI

Show Summary:

All you hear these days on CNBC is inflation. How high will inflation go? What is causing inflation? But how is the CPI constructed to measure inflation? What are the weightings of CPI components? And, what is the PCE Inflation Index which is preferred by the Fed?

• • What is the CPI Consumer Price Index?
• • What is the PCE Personal Consumption Expenditures?
• • What is Trimmed Mean PCE Inflation?
• • Owners' equivalent rent
• • How often do components of the CPI index change?
• • Difference between CPI and PCE
• • Sticky CPI vs Flexible CPI
• • Headline Inflation vs Core Inflation
• • Where to find inflation data
• • Difference between YOY Year over Year and MOM Month over Month data

Mentioned in this Episode:

Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk

PCE Trimmed Mean Inflation https://www.dallasfed.org/research/pce.aspx

CPI BLS Bureau of Labor Statistics latest inflation data https://www.bls.gov/cpi/

Sticky CPI and Flexible CPI Atlanta Fed https://www.atlantafed.org/research/inflationproject/stickyprice